The CLARITY Act has encountered a new Senate dispute over vertical integration rules ahead of its Sep. 15 cloture vote, which requires 60 votes to advance the crypto market structure bill.
Summary
- Democrats want regulators to set conflict-of-interest standards for vertically integrated crypto companies.
- Republicans support safeguards but fear a future administration could misuse the proposed authority.
- Senators Cory Booker, Cynthia Lummis, and John Boozman are negotiating the provision.
- Polymarket traders give the bill a 17% chance of becoming law in 2026.
CLARITY Act negotiations focus on vertical integration
Politico reported on Sep. 10 that Senate Democrats are pressing for language directing regulators to create standards for vertically integrated crypto businesses, adding another unresolved matter to negotiations over the CLARITY Act.
Under the proposal described by Politico, the standards would address conflicts that can arise when one company controls several parts of a crypto transaction or market. Democratic senators have argued that the language follows principles Republicans supported when the legislation moved forward earlier in 2026.
In crypto markets, vertical integration can place exchange operations, trading services, custody, and other functions under related corporate entities. FTX provided a prominent example because it operated a crypto exchange while its affiliated firm, Alameda Research, served as a market maker and conducted trading activity.
According to Politico, Republican senators support conflict-of-interest protections but have raised concerns about giving regulators extensive power over vertically integrated companies. GOP lawmakers fear that a future Democratic administration could use the provision against crypto businesses through stricter enforcement or rulemaking.
Industry representatives have also opposed the Democratic proposal, Politico said, although the supplied report did not identify the companies or trade groups involved in the discussions.
The disagreement has arrived as the Senate prepares for a procedural vote on Sep.r 15. Senate Majority Leader John Thune filed the cloture motion before the August recess, and the vote will determine whether senators can begin formal debate rather than decide whether the bill becomes law.
A recent crypto.news report on the Sep. 15 vote said cloture requires 60 senators. With Republicans holding 53 seats, supporters would need backing from at least seven Democrats or independents if every Republican votes in favor.
Senators seek common ground on consumer protections
Democratic Sen. Cory Booker is negotiating the vertical integration language with Republican Sen. Cynthia Lummis and Senate Agriculture Committee Chair John Boozman, according to Politico.
Booker told the publication that the two parties have “shared values” in the talks, indicating that they agree on the need to address certain conflicts even though they have not settled the bill’s wording.
At the same time, Booker made his support conditional on stronger safeguards for users.
“I will not support a bill that does not protect consumers from the potential downsides of a Web 3.0,” he told Politico.
Negotiators must decide how much authority regulators should receive, which companies would fall under the provision, and what conduct would violate the standards. Politico’s report did not say that lawmakers had reached a final agreement on any of those points.
The vertical integration issue joins an unsettled ethics provision covering crypto activity by public officials. Democrats and Republicans have yet to reach a bipartisan agreement on that section, while banks continue to press lawmakers for tighter restrictions on rewards tied to stablecoins.
Earlier coverage of the bill noted that an ethics clause in a July draft would restrict the president, vice president, members of Congress, and their spouses from issuing or sponsoring digital assets while in office. The Department of Justice would enforce the restriction under that version, with penalties reaching $250,000 per day.
Democrats have sought tougher enforcement and longer-lasting restrictions, while Republicans have warned that expanding the provision could cost the legislation White House support. President Donald Trump has urged Congress to approve the bill, but his family’s involvement in digital assets has kept ethics language at the center of the negotiations.
Stablecoin rewards remain another obstacle
Banking groups are separately lobbying against language that would allow certain rewards connected with stablecoins. The dispute concerns whether crypto exchanges and their affiliates should be permitted to offer payments that resemble interest on dollar-pegged tokens.
According to the earlier Sep. 10 report, the CLARITY Act would prohibit stablecoin yield that operates like interest on a bank deposit while permitting rewards connected with payments, transactions, or liquidity provision. Banks have called for restrictions to extend to exchanges and affiliated businesses.
Coinbase has a direct financial interest in the outcome because its USDC rewards programs generate about $1.35 billion in annual revenue, the report said. Banking groups contend that such products can draw deposits away from traditional lenders even when issuers do not label the payments as interest.
Treasury Secretary Scott Bessent has also urged senators to pass the CLARITY Act, warning that failure could weaken U.S. leadership in digital assets and limit tools used to oversee the sector. His intervention came as lawmakers continued talks over ethics, stablecoin rewards and consumer protection requirements.
For U.S. investors and crypto companies, the legislation would determine how federal oversight is divided between the Securities and Exchange Commission and the Commodity Futures Trading Commission. The bill would create classifications for digital assets and establish registration and operating standards for exchanges, brokers, and dealers handling digital commodities.
The proposed regulatory framework would also require customer asset segregation and anti-money-laundering controls for registered digital-asset intermediaries. Non-custodial software developers could receive exemptions from money-transmitter registration under separate provisions, subject to limits involving illicit transactions.
September vote may not settle the bill’s fate
Even if the Senate approves cloture, the procedural result would only open debate. Senators could still amend the legislation before holding a final vote, and any version passed by the chamber would need to be reconciled with the House bill.
The House previously approved the legislation by a 294-134 vote, giving it bipartisan support in that chamber. Senate passage remains more difficult because supporters must first clear the 60-vote cloture threshold before reaching a final vote.
Coinbase CEO Brian Armstrong has said the crypto sector will still receive regulatory guidance if the Senate effort fails, as agencies can continue writing rules under their existing authority. Agency rules, however, would not carry the same permanence as federal legislation and could be revised by a later administration.
Scheduling has created another procedural constraint. House leaders canceled sessions planned for the weeks of Sep. 21 and Sep. 28, leaving little time to reconcile and approve a Senate version before lawmakers leave Washington for the midterm elections.
A final vote could therefore move into the lame-duck session after the elections even if senators approve cloture on Sep. 15. Polymarket traders currently assign a 17% probability that President Trump will sign the CLARITY Act into law before the end of 2026.
